The Private Sector Development blog at the World Bank has a cool post on the effect of labor laws on computer use. Social scientists have theorized that the stricter the regulations on hiring and firing workers, the more companies turn to computers and technology.

Turns out that conventional wisdom is correct, a World Bank study shows:

Amin (2009) tests this hypothesis on 1,948 retail stores in India using data from Enterprise Surveys, a regular World Bank survey on firm performance, firm characteristics and the business climate….The study finds that the percentage of retail stores that use computers rises by 6.2 percentage points as we move from the state with the least to the median level of rigid labor laws. This is a large effect given than only 19% of the stores in the sample use computers.

The PSD blog cautions against reading too much into the results, though:

That is, to properly understand the computers/productivity relationship one needs to distinguish between the motive of saving labor because of labor regulations and the motive of enhancing efficiency through computer usage. To what extent these effects hold remains to be empirically ascertained – an important task given that the use of computers and other modern devices is fast spreading across the globe.

But there’s a nice synergy there. And I wonder whether the same scientists have studied the corollary between India as an outsourcing hub and an IT giant.

Related Stories

Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a senior editor at The National Interest. Prior to Fletcher, he taught at the University of Chicago and the University of Colorado at Boulder. Drezner has received fellowships from the German Marshall Fund of the United States, the Council on Foreign Relations, and Harvard University. He has previously held positions with Civic Education Project, the RAND Corporation, and the Treasury Department.

0 Shares

20 Shares

Michael Santoro Michael Santoro is assistant professor in the international business and business environment department at Rutgers Business School and author of Profits and Principles: Global Capitalism and Human Rights in China (Ithaca: Cornell University Press, 2000).
| In Other Words |

0 Shares

About Passport

Passport brings you unexpected angles on the day's top news -- and under-the-radar items from around our wild world.